Dive Brief:
- Dutch Bros expects to reach 2,029 open shops by 2029 and updated its total addressable market to over 7,000 potential restaurants, compared to the 4,000-unit-goal it set in 2023, the company said Thursday in a press release related to its investor day.
- The coffee chain opened its 1,000th shop in February along with 27 shops during the first quarter as of March 24. Three more shops are expected to open by March 31.
- The company’s same-store sales were up by 4.6% through March 24 compared to the same period in 2024.
Dive Insight:
Dutch Bros’ growth strategy will be supported by an increase in mobile orders, a possible expansion into food and a new channel of consumer packaged goods.
The coffee chain expects annual revenue growth of roughly 20%, with new shop growth ranging from the low-single digits to mid-teens. The brand is pushing to raise company-operated shop contribution margins to about 30%, with the expectation of “maintaining this level to support long-term shop-level investments,” the company said.
Such growth in revenue and store numbers could make Dutch Bros a much more formidable competitor in the U.S. QSR coffee market by the end of the decade.
“Led by field operations teams deeply rooted in our culture and hungry to grow, and supported by a leadership team with complementary skills and firsthand knowledge of scale, we are well positioned to deliver sustainable, long-term value,” Christine Barone, CEO and president of Dutch Bros, said in a statement.
To further support its aggressive expansion, the chain appointed Brian Cahoe as chief development officer earlier this year to oversee new shop growth and the chain’s development strategy. Cahoe has over 25 years of experience in QSRs, and most recently served as chief development officer at KFC U.S.
Additionally, the company continues to grow its mobile order and pay sales, which William Blair analyst Sharon Zackfia said is a particular positive for the chain.
“We believe upside potential exists as the brand embarks on a proven path of enhancing customer access through mobile order and pay (launched late 2024) with an expanded food offering on tap for 2026—both of which should serve to bolster Dutch’s morning daypart, which stands at about one-third of sales versus roughly 50% for its peer group,” she said in a report emailed to Restaurant Dive.
Mobile order and pay is now up to 10% of transactions, Zackfia said, compared to about 8% during the fourth quarter. This channel is increasing the use of Dutch’s walk-up windows as well — utilization reached 15% compared to historical levels of 10%, with many mobile customers preferring to use this method for pickup.
A food menu is still in test with eight items, including a wrap, two breakfast sandwiches, a waffle and various bakery items, Zackfia said.
“The goal is to drive incremental morning sales and frequency with minimal complexity, with the opportunity to drive food mix much higher than the current 2% (peers are in the 25% range, although Dutch will likely not achieve that level given its truncated assortment),” Zackfia said.
In addition to its aggressive growth track, the chain will increase its brand awareness through consumer packaged goods, according to a press release. Partnering with Trilliant Food & Nutrition, Dutch Bros will sell packaged coffee and related products in retail outlets. Trilliant, which is one of the largest manufacturers of single-serve and ready-to-drink coffee, has a reach of 50,000 retail outlets.
